Reference no: EM132662616

Questions -

Q1. Uncle Bob's Car Sales provides a one-year labour and parts warranty with every car solD. It is expected that 1500 cars will be sold during the year. Past records show that about 6% of cars require warranty repairs at an average cost of $300 per car. What is the accounting entry to record the expected warranty expense for the year?

a. DR Provision for warranties $27 000; CR Warranty expense $27 000

b. DR Warranty expense $27 000; CR Provision for warranties $27 000

c. DR Provision for warranties $27 000; CR Bank $27 000

d. No entry is required

Q2. A liability where the borrowings are from many investors, representing a written promise to pay a principal amount at a specific time, as well as interest on the principal at a specific rate per period, is known as:

a. a debenture.

b. collateral.

c. defeasance.

d. a sinking funD.

Q3. Which of the following is not an advantage of companies over sole traders or partnerships?

a. Limited liability

b. Continuity of existence

c. Less government regulation

d. Simpler transferability of ownership

Q4. Partner's drawings are:

a. amounts credited for working in the partnership.

b. money borrowed from the partnership.

c. partner's artwork.

d. cash amounts withdrawn or private expenses paid by the partnership on behalf of a partner, in anticipation of profits.

Q5. What type of account is a reserve?

a. Asset

b. Expense

c. Liability

d. Equity

Q6. Which of the following statements concerning partnership agreements is true?

a. The partnership agreement must be in writing.

b. The contractual authority of each partner should be specified.

c. Partner's must always contribute equal amounts of capital.

d. It is not necessary to specify the duration of the partnership.